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Stock futures trading lower

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Stock futures are trading marginally lower this morning as Treasury bonds find some buying. Currently we're seeing S&P futures trade lower by 6 points at 1,143, NASDAQ futures are off 19 points at 1,597 and Dow futures are down 55 points at 9,825.

Treasury bond YIELDS are lower across the major maturities this morning. YIELDS in the shorter-end 13-week ($IRX.X) are at 1.83% and the 5-year YIELD ($FVX.X) is trading 4.254%. The bond market spells of some defensive action this morning, so equity bulls might want to be cautious near the open of trading.

Gap Inc. downgraded at Prudential

Shares of apparel retailer Gap Inc. (NYSE:GPS) $14.40, are being downgraded at Prudential this morning to "sell" from "hold" based on worsening Q4 comparison expectations and valuation. Prudential thinks holiday merchandising looks bad and management acknowledges that there is no near term product fix in the making. Prudential is taking down FY02 estimates to $0.15 from $0.20 and FY03 to $0.40 from $0.50.

Merrill adds UPS to focus list

Merrill Lynch is adding shares of United Parcel Service (NYSE:UPS) $55.00 to its focus list this morning. Merrill believes that UPS is best positioned to capitalize on revival in airfreight volumes as economy revives. Fundamental cited at Merrill are a strong balance sheet, free cash flow, high operating leverage and cost flexibility.

January Light, Sweet Crude down 1.2%

January Light, Sweet Crude (cl02f) are trading down 1.23% at $19.24 after the American Petroleum Institute (API) reported a 3.8% increase in heating oil inventories. The higher inventory level in heating oil is most likely the result of mild weather in the Northeastern part of the United States.

Jeff Bailey
Senior Market Technician
Option Investor

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